Question 1

Micro value drivers are those factors affecting specific functions within the firm.

Accepted Answer

A) True 
 B)False

Question 2

The tangible book value or equity per share method is applicable primarily to the following industries:

Accepted Answer

A)  Steel and financial services 
B)  Distribution and financial services 
C)  Electric and natural gas utilities 
D)  Coal and copper mining 
E)  Space and defense 
A)  Steel and financial services 
B)  Distribution and financial services 
C)  Electric and natural gas utilities 
D)  Coal and copper mining 
E)  Space and defense

Question 3

The enterprise value to EBITDA multiple relates the total book value of the firm from the perspective of the liability side of the balance sheet (i.e., long-term debt plus preferred and common equity), excluding cash, to EBITDA.

Accepted Answer

A) True 
 B)False

Question 4

Asset oriented approaches to valuation involve the use of tangible book value, liquidation value, discounted cash flows, and break-up values.

Accepted Answer

A) True 
 B)False

Question 5

The comparable recent transactions method is usually considered less reliable than the comparable companies' valuation method.

Accepted Answer

A) True 
 B)False

Question 6

LAFCO Industries believes that its two primary product lines, automotive and commercial aircraft valves, are rapidly becoming
obsolete. Its free cash flow is rapidly diminishing as it loses market share to new firms entering its industry. LAFCO has $200
million in debt outstanding. Senior management expects the automotive and commercial aircraft valve product lines to
generate $25 million and $15 million, respectively, in earnings before interest, taxes, depreciation, and amortization next year. Senior management also believes that they will not be able to upgrade these product lines due to declining cash flow and excessive current leverage. A competitor to its automotive valve business last year sold for 10 times EBITDA. Moreover, a company that is similar to its commercial aircraft valve product line sold last month for 12 times EBITDA. Estimate LAFCO's breakup value before taxes.

Accepted Answer

$230 million
PV (automotive va

Question 7

Price-to-earnings ratios of comparable companies provide an excellent means of valuing the target firm at any point in the business cycle.

Accepted Answer

A) True 
 B)False

Question 8

Limitations in applying the comparable companies' method of valuation include which of the following?

Accepted Answer

A)  Finding truly comparable companies is difficult 
B)  The use of market-based methods can result in significant under- or overvaluation during periods of declining or rising stock markets 
C)  Market-based methods can be manipulated easily, because the methods do not require a clear statement of assumptions with respect to risk, growth, or the timing or magnitude of future earnings and cash flows. 
D)  A, B, & C 
E)  A & B only 
A)  Finding truly comparable companies is difficult 
B)  The use of market-based methods can result in significant under- or overvaluation during periods of declining or rising stock markets 
C)  Market-based methods can be manipulated easily, because the methods do not require a clear statement of assumptions with respect to risk, growth, or the timing or magnitude of future earnings and cash flows. 
D)  A, B, & C 
E)  A & B only

Question 9

Which of the following represent options available to managers in making investment decisions?

Accepted Answer

A)  Delay initial investment 
B)  Accelerate cumulative investment 
C)  Abandon the investment at a later date 
D)  A & B only 
E)  A, B, & C 
A)  Delay initial investment 
B)  Accelerate cumulative investment 
C)  Abandon the investment at a later date 
D)  A & B only 
E)  A, B, & C

Micro value drivers are those factors affecting specific functions within the firm.

The tangible book value or equity per share method is applicable primarily to the following industries:

The enterprise value to EBITDA multiple relates the total book value of the firm from the perspective of the liability side of the balance sheet (i.e., long-term debt plus preferred and common equity), excluding cash, to EBITDA.

Asset oriented approaches to valuation involve the use of tangible book value, liquidation value, discounted cash flows, and break-up values.

The comparable recent transactions method is usually considered less reliable than the comparable companies' valuation method.

Price-to-earnings ratios of comparable companies provide an excellent means of valuing the target firm at any point in the business cycle.

Limitations in applying the comparable companies' method of valuation include which of the following?

Which of the following represent options available to managers in making investment decisions?

Introduction to Mergers, Acquisitions, and Other Restructuring Activities

The Regulatory Environment

The Corporate Takeover Market:

Planning: Developing Business and Acquisition Plans: Phases 1 and 2 of the Acquisition Process

Implementation: Search Through Closing: Phases 310 of the Acquisition Process

Postclosing Integration: Mergers, Acquisitions, and Business Alliances

Merger and Acquisition Cash Flow Valuation Basics

Financial Modeling Basics:

Analysis and Valuation

Structuring the Deal:

Structuring the Deal:

Financing the Deal

Applying Financial Modeling

Business Alliances: Joint Ventures, Partnerships, Strategic Alliances, and Licensing

Alternative Exit and Restructuring Strategies

Alternative Exit and Restructuring Strategies:

Cross-Border Mergers and Acquisitions:

Filters

Exam 8: Relative, Asset-Oriented, and Real Option

Micro value drivers are those factors affecting specific functions within the firm.

The tangible book value or equity per share method is applicable primarily to the following industries:

The enterprise value to EBITDA multiple relates the total book value of the firm from the perspective of the liability side of the balance sheet (i.e., long-term debt plus preferred and common equity), excluding cash, to EBITDA.

Asset oriented approaches to valuation involve the use of tangible book value, liquidation value, discounted cash flows, and break-up values.

The comparable recent transactions method is usually considered less reliable than the comparable companies' valuation method.

Price-to-earnings ratios of comparable companies provide an excellent means of valuing the target firm at any point in the business cycle.

Limitations in applying the comparable companies' method of valuation include which of the following?

Which of the following represent options available to managers in making investment decisions?

Introduction to Mergers, Acquisitions, and Other Restructuring Activities

The Regulatory Environment

The Corporate Takeover Market:

Planning: Developing Business and Acquisition Plans: Phases 1 and 2 of the Acquisition Process

Implementation: Search Through Closing: Phases 310 of the Acquisition Process

Postclosing Integration: Mergers, Acquisitions, and Business Alliances

Merger and Acquisition Cash Flow Valuation Basics

Financial Modeling Basics:

Analysis and Valuation

Structuring the Deal:

Structuring the Deal:

Financing the Deal

Applying Financial Modeling

Business Alliances: Joint Ventures, Partnerships, Strategic Alliances, and Licensing

Alternative Exit and Restructuring Strategies

Alternative Exit and Restructuring Strategies:

Cross-Border Mergers and Acquisitions:

Filters